Banking Sector Performance During the COVID-19 Crisis

Asli Demirguc-Kunt, Alvaro Pedraza and Claudia Ruiz Ortega

No 9363, Policy Research Working Paper Series from The World Bank

Abstract: This paper analyzes bank stock prices around the world to assess the impact of the COVID-19 pandemic on the banking sector. Using a global database of policy responses during the crisis, the paper also examines the role of financial sector policy announcements on the performance of bank stocks. Overall, the results suggest that the crisis and the countercyclical lending role that banks are expected to play have put banking systems under significant stress, with bank stocks underperforming their domestic markets and other non-bank financial firms. The effectiveness of policy interventions has been mixed. Measures of liquidity support, borrower assistance, and monetary easing moderated the adverse impact of the crisis, but this is not true for all banks or in all circumstances. For example, borrower assistance and prudential measures exacerbated the stress for banks that are already undercapitalized and/or operate in countries with little fiscal space. These vulnerabilities will need to be carefully monitored as the pandemic continues to take a toll on the world’s economies.

Keywords: Financial Sector Policy; Macroeconomic Management; International Trade and Trade Rules; Finance and Development; Banks&Banking Reform (search for similar items in EconPapers)
Date: 2020-08-14
New Economics Papers: this item is included in nep-cba, nep-fdg and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (24)

Downloads: (external link)
http://documents.worldbank.org/curated/en/20948159 ... -COVID-19-Crisis.pdf (application/pdf)

Related works:
Journal Article: Banking sector performance during the COVID-19 crisis (2021)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wbk:wbrwps:9363

Access Statistics for this paper

More papers in Policy Research Working Paper Series from The World Bank 1818 H Street, N.W., Washington, DC 20433. Contact information at EDIRC.
Bibliographic data for series maintained by Roula I. Yazigi ().